Failure is Good!

Last week my blog entries focused on market research and asking whether or not it is something you should consider before sinking your savings into a business.

I hope it provoked some positive thinking.

Today I would like to round off the brief series with a statement. Failure is good!

Just ask anyone who has ever succeeded. Thomas Edison even made a career of it and famously stated, Results? Why, man, I have gotten lots of results! If I find 10,000 ways something won't work, I haven't failed. I am not discouraged, because every wrong attempt discarded is often a step forward....

Testing your business ideas on the market is exactly the same as inventing the light bulb and the more disruptive your business idea is the more you need to make sure you really understand the market dynamics and sentiments. If you don’t, be prepared for an expensive failure as opposed to a good one.

The ten questions approach I outlined last week is proven to work and help businesses quickly and relatively easily find out whether their idea is good, bad or most likely -  'Could be good, but needs some refining and tuning to fit what the market wants.'  You can do this many, many times quickly and easily. By listening to the market and working with it, the market will come with you. It is in the interests of the market to do so.

The best part about it is simply that it only really costs time and done right helps you discard the parts of your idea that won’t work in the market and really focus in on those that do – why not make sure to stack the odds in your favour, no one else will?

There will be a couple of case studies about this when the book and updated site launch at the beginning of next month, but the bottom is this, when we have done this in the past on more than one occasion, it has led to companies winning some very big contracts right at the point when they launch. 

Its Your Money, Why Burn it?

I was editing one of the final chapters of the Market is Always Right this morning to get it ready for publishing and felt very inspired to ask a question in this week’s blog.

Right now more than 70% of new businesses don’t survive to their 3^rd anniversary.

We know from endless publications and pieces of research that in the main businesses simply run out of money because they can’t make the sales they need in order to survive. We also know that there is only one reason that companies don’t make sales – they are trying to sell something their market does not want to buy.

I find this surprising because when you consider starting a business, you pour in your passion, ambition, belief and your money to make it work. It takes over your life as you focus on your ambitions and your goals. All of this is brilliant and incredibly important, so why do so many fail to make the sales they need?

So here is the big question. While your ambitions and ideas are all great and I hope you achieve them all, what about the market’s needs?

Would it surprise you to know that in our experience and that of others a lot more than half of new businesses have nowhere near the level of market knowledge they need to maximize their chances of success?

This is quite surprising in some ways, because market research is incredibly inexpensive and you can do it yourself before you invest money in setting up the business and spending your savings on a business that is not fully developed and according to the stats, is therefore likely to fail – which is pretty much like burning your money you don’t need to.

This is not a negative post, in fact I hope you take it as a hint that there are some simple, low cost and very effective things you can do that will save you a lot of wasted money, time and stress simply by doing more to get to know your market as early as possible.

Tomorrow, I’ll continue this theme with some ideas you might want to consider when researching your market.

How Prejudiced are you?

This is a really important concept for anyone that intends to start a business, because we are all prejudiced.

This can get a little ‘new age’ for a lot of people, but it is absolutely true and something you  always bear in mind when you are thinking about your market, because you will be applying your prejudices.

So what do I mean by prejudice?

Well, I personally think that all mobile phone network operators are useless, at the same time a lot of my friends think they are wonderful organisations.

So why is this important?

Think of it this way. If I chose to start a business that focused on solving the problem of useless mobile phone network operators it would only appeal to people like me that think the same about mobile phone operators. This is great if there are lots of people like me, or would my prejudices be leading down a blind alley purely because my personal prejudices about mobile phone operators. As I have already mentioned more than half my friends think mobile phone operators are wonderful so they would see no need for my business. If my friends are any kind of representative sample of the market then my business would struggle to find traction and make sales except as an expensive niche product.

I hope this makes sense because prejudice as I have already said is something we all have, we can’t help it because we all experience all the highs and lows of life, from which we build up our outlook on everything in our lives. All of that would be fine, if everyone had entirely the same prejudices and outlook, but they don’t. Our prejudices and experiences are all unique and as a result they are both a very positive thing and also a powerful negative.

They are positive because it is likely that your experiences and prejudices may well give you the unique insight that helps you come up with a winning business idea. At the same time they can just as easily lead you down blind alleys that go nowhere.

The trick is being able quickly test all your ideas against a measurable model of the market in order to discard the duff ones and harness and focus on the good ones.

“Easier said than done,” you cry.

Actually the whole point of Backwards Business is to give you a framework, a way of easily understanding markets and how they work so you can test your ideas quickly in their target market and without the risks associated with having to build product.

The most important thing to remember is that it is not how you perceive a market, it is how the majority of the people in the market perceive the product or service you want to sell to it. 

To get that information you cannot afford to allow your prejudices to skew your views of the market. We cover this in a lot of detail with you when you go through the programme, but I thought it would be good to give introduce you to the idea in the blog.

By Tim Sandford